Transport tycoon's widow battles lender over Sh174m 'fictitious' loan

Noor Ali Islam Jeizan and DTB are embroiled in a legal dispute over Sh174m loan. [iStockphoto]

Noor Ali Islam Jeizan, a widow, lives on the edge hoping that the scales of justice will tilt in her favour.

On the other hand, Diamond Trust Bank (DTB) is demanding its pound of flesh, claiming that it should be allowed to sell her property to recover a Sh174 million loan.

Islam and DTB are embroiled in a legal dispute over the loan facility allegedly owed by her late husband Anwar Mohammed, who was the proprietor of transport firm Bayusuf Ltd.

The bank first sold off a yard and several trucks, arguing that Bayusuf had defaulted on paying the loan. The agreement was to pay at least 26 per cent per annum on the amount borrowed.

The lender then went for the family home, placing it for auction last year.

The accounts given to the court by both are as varied as night and day. On one hand, Islam claims in the case before High Court Judge Kizito Magare that DTB created fictitious accounts that resulted in the contested amount.

She claims the loan that DTB lent Bayusuf Ltd was repaid on June 30, 2011, and there was an extra Sh17 million.

This followed an auction of the first property that the couple had used to secure the loan for their company.

Islam claimed that the lender is holding onto crucial documents that would affirm her story that Bayusuf does not owe DTB a coin.

But DTB disputes her account. According to the bank, there was consent between it and Islam on July 17, 2021 when it released all the documents, including the details of the accounts at the centre of the dispute.

The lender said that its case against Islam was backed by an independent report of the Interest Rates Advisory Centre (IRAC) confirming that Bayusuf owes it the amount.

DTB asserted that the request for the documents was a fishing expedition.

In her reply, Islam argued that the IRAC report was on the interest on the loan and not her claims that there was fraud involved.

The protracted dispute has shifted from a civil to a criminal case, with Islam insisting on full disclosure of the accounts.

From the correspondence between her lawyers and the Central Bank of Kenya (CBK), the regulator claims that it got stuck along the way as the bank did not reveal full information about how Bayusuf ended up with such a huge loan.

Islam narrated that in 2013, DTB decided to auction the property that Bayusuf was using as a yard.  She stated that her then-lawyers stopped representing her in a case to challenge the sale.

She said that the second law firm she hired asked her to get an auditor as she explained that sometime in 2011, the bank brought her documents seeking to restructure the loans issued under the instructions of her late husband.

According to Islam, the restructuring documents were brought at the time she was mourning her husband.

“I lost my husband who was my best friend, and the whole ordeal had taken a toll on my children. I was not in the correct state of mind, and I was never given an opportunity to seek independent advice from a professional,” she argued.

She said Omenye and Associates, a certified public accountants firm, did an audit and found that there was no justification to restructure the loan as the company had not breached the terms of the offer.

Islam told the court that the audit revealed that there was a bank account which was operated by the bank without the authority of Bayusuf. The account, she said, was used to draw an unauthorised overdraft facility and was dormant.

According to her, a total of Sh120 million was disbursed as of July 1, 2011.

“The sole purpose of the defendant bank restructuring the facilities in 2011 was to legitimise the unauthorised overdraft on account no 020098080 and to obtain additional securities from the client (plaintiffs’ company) to cover its irregular operations on account no 020098080 which was not permissible,” she claimed.

In the meantime, Islam reported the issue to the CBK’s Banking Fraud Investigations Unit (BIFU). This opened another phase of the war between BIFU and the lender. 

She said that following the orders by Mombasa court magistrate Christine Ongweno, DTB partly released documents relating to the account but failed to supply information on who had given the authority for the internal transfers.

The bank had moved to the High Court over the orders, claiming that Ongweno did not consider that there was a civil case between it and Islam. 

On the other hand, the Director of Public Prosecution, who was appearing on behalf of BIFU argued that the investigations were different from the case between the two parties.

Justice Njoki Mwangi reinstated the orders requiring DTB to comply as the second law firm backed out of the case, citing personal reasons.

The third lawyer came in and wrote to CBK seeking to know how far it had gone with the probe.

However, Paul Abuto, in charge of BIFU in Mombasa, wrote back on November 10, 2023 that DTB had not provided the documents.

“DTB to date has still not provided to us with the requested information, hence delaying the investigations. This is even after our letter dated March 5, 2021 attached with the High Court ruling received in their Moi Avenue Branch Mombasa on the same date,” said Abuto, adding that BIFU had written to the DPP citing the predicament.

The bank is pushing to be allowed to sell the house. In its submissions and reply, it argues that Islam has sought to bar it from auctioning the securities six times but failed.

“Legal ingenuity by the plaintiff should not be allowed. Nothing has changed apart from little modification,” claimed the bank.

DTB’s debt recovery officer Njoki Ndonga told the court that following the Omenye report, they agreed to have IRAC as a joint expert, and the agency affirmed that Bayusuf owed it Sh174 million.

According to Njoki, the house could be sold, and in the event, that there will be a loss on Islam’s part, the same could be compensated. She accused Islam of using extrajudicial means to ensure that it does not auction the house.

“The bank has not engineered any default by the plaintiff, and the amounts that are outstanding are clearly due and owing to the bank as evident from the court-appointed joint-experts report. The bank, a financial institution of repute capable of meeting an award for damages should this honourable court deem it proper to order and will undertake to expeditiously comply with the same,” replied Njoki.

The bank claimed that there were orders issued by Justice Patrick Otieno, allowing it to auction the property and that Bayusuf neither appealed against the orders issued in 2018 nor sought a review.

It asked the court to dismiss the application. Justice Kizito will issue a ruling on April 4, 2024.